The U.S. Federal Reserve is expected to further slash interest rates on Wednesday and some experts believe the move could have a positive impact on car loans.
According to Reuters, Chief Economist for LendingTree.com, Tendayi Kapfidze, pointed out that while the expected rate cut will not affect car costs on a significant level, consumers can leverage on the opportunity to request for better car loan deals.
Kapfidze explained that there are two options through which consumers can take advantage of the Fed cut: the loan's interest rate, or the overall price of the car.
If the Federal Reserve cuts rates again on Wednesday, car manufacturers will be given some space for easing up on the interest rates they offer for vehicle buyers. Consumers can then ask for better deals that will fit their budgets.
Whenever lower interest rates are implemented, most car manufacturers also use the chance to attract more potential buyers. They use the lower rates to sell autos that are currently on low demand.
Before rate cuts, low-demand cars can be hard for consumers to obtain. With lower interest rates and potential packaged deals, consumers can ease their burdens on loans and cash-in purchases on automobiles.
Aside from car loans, the expected Fed cut this week could also bring some sunshine to global stock markets. During last year's cut, stock markets reacted positively, driving some shares to reach record highs.
Analysts believe another cut within an "insurance" cycle will lead to positive reactions among investors. Stock markets have a tendency to spike and whenever insurance cuts are imposed by the Federal Reserve.
While another Fed cut may help ease some burdens for consumers and stock markets, some analysts said markets will most likely not hear what they're expecting from U.S. Fed Chairman Jerome Powell.
Chief Economist at Grant Thornton, Diane Swonk, argued that Powell will not "promise anything more" than what he said during the previous meeting of the Fed that the rate cut was just a "mid-cycle adjustment," CNBC reported.
Powell's current approach to the highly-anticipated Fed cut this week is expected to disappoint some markets as well as U.S. President Donald Trump, who has been stating that there's a lot of room for stimulus should the U.S. economy need to adjust.
Most investors are expecting additional rate cuts this year but some finance experts believe this week's Fed move is the end of this 2019. If the latter prediction is true, it would largely contradict Trump's previous calls for zero rates.